Danske Bank Raises Shares to Double Overweight – One sector rises due to Trump’s intentions

Danske Bank in his investment view, raises the shares to double overweight and the US shares from neutral weight to overweight.

“Double overweighting of stocks is not common in Danske Bank’s investment views, as the last time this happened was in 2018”, Danske Bank’s private economy economist Kaisa Kivipelto says in the announcement.

The change in the investment outlook is based on the strengthened outlook for the US economy. Even earlier, interest rate cuts were seen to support the pick-up in global growth, and the US presidential election was seen to have won Donald Trump’s is expected to further support US economic growth.

“The election victory of Trump and the Republicans brings with it a significant tailwind for US stocks and further supports the soft decline of the economy in the United States,” says Kivipelto in the press release, referring to Trump’s intentions to cut taxes and deregulate.

Although there has been concern in Europe about the election of Trump as president, according to Kivipello, the continued strong growth in the USA is a positive driver for the global stock market.

Changes in sectors

In its view, Danske now raises the global financial sector to overweight, because the sector will benefit from the planned deregulation and the boost in loan demand brought by growth.

Fixed income Danske lowers to double underweight. In particular, longer market interest rates are no longer expected to drop significantly, and as economic growth picks up, stocks are expected to perform better than fixed income investments.

Danske downgrades emerging market stocks from neutral to underweight. The USA’s protectionist policy is thought to accelerate the trade war, which in turn can affect developing markets.

Basic industry Danske also drops from neutral to underweight, as it is seen to be suffering from the slow growth of the Chinese economy and weak demand.

“During the autumn, China has tried to revive its weakly growing economy, so far without success. It is likely that the tightening relations between China and the United States will make it difficult for China’s economic growth.”